Check the appropriate box:
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þ
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Preliminary Proxy Statement
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¨
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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¨
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Definitive Proxy Statement
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¨
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Definitive Additional Materials
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¨
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Soliciting Material Pursuant to §240.14a-12
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MOLINA HEALTHCARE, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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¨
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Fee paid previously with preliminary materials.
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¨
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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Notice of 2019 Annual Meeting of Stockholders
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Date and Time
Wednesday, May 8, 2019
10:00 a.m., Eastern time
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Location
Park Hyatt New York
The Onyx Room
153 West 57
th
Street
New York, NY 10019
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1
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To elect three Class II directors to hold office until the 2022 annual meeting.
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2
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To consider and approve, on a non-binding, advisory basis, the compensation of our named executive officers.
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3
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To adopt amendments to the Company’s Certificate of Incorporation, as amended, to phase out and eliminate the classified Board of Directors to provide for the annual election of all directors.
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4
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To approve the Molina Healthcare, Inc. 2019 Equity Incentive Plan.
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5
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To approve the Molina Healthcare, Inc. 2019 Employee Stock Purchase Plan.
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6
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To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2019.
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7
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To transact such other business as may properly come before the meeting or any adjournment or postponement thereof.
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By internet
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By toll-free telephone
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www.proxyvote.com
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1-800-690-6903
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By mail
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In person
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Follow instructions on your proxy card
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At the Annual Meeting
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_______, 2019
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By Order of the Board of Directors
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Dale B. Wolf
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Chairman of the Board
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TABLE OF CONTENTS
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About Molina Healthcare
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201
8 Summary Compensation Table
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201
8 All Other Compensation Table
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201
8 Grants of Plan-Based Awards Table
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201
8 Outstanding Equity Awards at Fiscal Year End Table
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201
8 Option Exercises and Stock Vested Table
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CEO Pay Ratio
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Fiscal Year 201
9 Compensation
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PROPOSAL 4 -
Approval of the Molina Healthcare, Inc. 2019 Equity Incentive Plan
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PROPOSAL 5 - Approval of the Molina Healthcare, Inc.
2019 Employee Stock Purchase Plan
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Appendix A -
Certificate of Amendment to the Certificate of Incorporation
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Appendix B - Molina Healthcare, Inc. 2019 Equity Incentive Plan
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Appendix B
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Appendix C - Molina Healthcare, Inc. 2019 Employee Stock Purchase Plan
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Appendix C
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2018
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2017
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(Dollars in millions, except per-share amounts)
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Total Revenue
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$18,890
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$19,883
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Pre-Tax Income (Loss)
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$999
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$(612)
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Medical Care Ratio
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85.9%
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90.6%
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Pre-Tax Margin
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5.3%
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(3.1)%
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After-Tax Margin
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3.7%
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(2.6)%
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Net Income (Loss) per Diluted Share
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$10.61
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$(9.07)
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•
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Mr. Zubretsky has been serving as our president and chief executive officer since November 6, 2017. He served as the president and chief executive officer of The Hanover Insurance Group, Inc. from June 2016 to October 2017. Prior to that, Mr. Zubretsky served almost nine years at Aetna, Inc., where he most recently served as chief executive officer of Healthagen Holdings, a group of healthcare services and information technology companies at Aetna, from January 2015 to October 2015. Prior to that, he served as a senior executive vice president leading Aetna’s National Businesses from 2013 to 2014 and served as Aetna’s chief financial officer from 2007 to 2013.
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•
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Mr. Tran has over 35 years of experience in health care, previously having served as the chief financial officer for Sentry Data Systems from 2014 to 2018, and as the chief financial officer of WellCare Health Plans, Inc. from 2008 to 2014.
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•
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Mr. Barlow has over 29 years of legal experience, including counseling clients regarding federal securities laws, corporate governance, mergers and acquisitions, and litigation.
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•
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Ms. Sedmak brings more than 25 years of Medicaid managed care leadership experience in operations, strategy, and finance. Most recently, she was a senior adviser at McKinsey & Company, serving clients in the health care services and global corporate finance practice areas, and prior to that she served as president and chief executive officer for Aetna Medicaid/Dual Eligibles. Before Aetna, Ms. Sedmak held C-level leadership positions at Blue Cross and Blue Shield of Minnesota, CareSource, and General Electric.
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•
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Mr. Woys also has over 35 years of health care experience, of which he spent 30 years at Health Net where he most recently served as the executive vice president and chief financial and operating officer.
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•
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Mr. Keim has experience in the managed care and financial services fields, having served as executive vice president of corporate development and strategy for The Hanover Insurance Group, and prior to that having lead major strategic initiatives for Aetna, and having served as senior vice president of strategy and business development at GE Capital.
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•
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Mr. Hebert joined the Company from Tufts Health Plan, where he served as senior vice president of finance from 2016 to 2018, and prior to that, Mr. Hebert served as chief accounting officer at WellCare Health Plans, Inc. from 2010 to 2016.
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•
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Mr. Anderson has previously served as the chief human resources officer for WellCare Health Plans from October 2010 to August 2016, and most recently served as the chief administrative officer for Meduit LLC from April 2017 to December 2018.
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•
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In May 2018, our Washington health plan was selected by the Washington State Health Care Authority to enter into a managed care contract for the eight remaining regions of the state’s Apple Health Integrated Managed Care program, in addition to the two regions previously awarded to us.
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•
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In June 2018, our Florida health plan was awarded comprehensive Medicaid Managed Care contracts by the Florida Agency for Health Care Administration in Regions 8 and 11 of the Florida Statewide Medicaid Managed Care Invitation to Negotiate.
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•
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In July 2018, our Puerto Rico health plan was selected by the Puerto Rico Health Insurance Administration to be one of the organizations to administer the Commonwealth’s new Medicaid Managed Care contract.
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•
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Our Mississippi health plan commenced operations on October 1, 2018 and served approximately 26,000 Medicaid members as of December 31, 2018. In December 2018, our Mississippi health plan was awarded a contract by the Mississippi Division of Medicaid for the Children’s Health Insurance Program. Services under the new three-year contract were initially set to begin July 1, 2019; however, the start date is now pending the outcome of a protest of the contract awards.
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Proposal
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Board Vote Recommendation
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To elect three Class II directors to hold office until the 2022 annual meeting.
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FOR
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To consider and approve, on a non-binding, advisory basis, the compensation of our named executive officers.
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FOR
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To adopt amendments to the Company’s Certificate of Incorporation, as amended, to phase out and eliminate the classified Board of Directors to provide for the annual election of all directors.
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FOR
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To approve the Molina Healthcare, Inc. 2019 Equity Incentive Plan.
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FOR
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To approve the Molina Healthcare, Inc. 2019 Employee Stock Purchase Plan.
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FOR
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To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for 2019.
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FOR
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ü
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THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR
THE ELECTION OF EACH DIRECTOR NOMINEE.
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Mr. Richard C. Zoretic
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Business Experience
•
Current Member of the Board of Directors of Babel Health, a software company offering risk adjustment solutions for government sponsored health plan businesses, since 2018
•
Current Independent Director of Aveanna Healthcare, provider of pediatric care, since 2017
•
Current member of the Board of Directors of Kepro, a medical management and cost containment solution provider, since 2018
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Former member of the Board of Directors of Landmark Health from 2014 to 2018; HealthSun Health Plans from 2016 to 2017; and, Eastern Virginia Medical School from 2011 to 2014
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Executive Vice President, WellPoint, Inc. and President of WellPoint’s Government Business Division, from 2013 to 2014
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Amerigroup Corporation, from 2003 to 2012, with positions including: Chief Operating Officer from 2007 to 2012; Executive Vice President, Health Plan Operations & Healthcare Delivery from 2005 to 2007; and Chief Marketing Officer from 2003 to 2005
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Management Consultant at Healthcare Practice, Deloitte Consulting from 2001 - 2003
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Executive Vice President at iSolutions, Workscape, Inc. from 2000 - 2001
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Various executive positions at United Health Group, from 1994 to 2000, including: President, Commercial Middle Market Business Segment from 1999 to 2000; Senior Vice President, Mid-Atlantic Operations from 1996 to 1999; and Senior Vice President, Corporate Sales & Marketing from 1994 to 1996
•
Graduated Pennsylvania State University, with a B.S. in Finance
Skills and Qualifications
Mr. Zoretic has more than 30 years of experience in the healthcare business field, with responsibilities ranging from company operations to business structuring. He has also served in several board of director positions for healthcare and health technology companies. Mr. Zoretic’s comprehensive business background, and extensive past and current board experiences, provide an invaluable knowledge base for his service on the Board and as a member of the compliance and quality committee, and the Company’s audit committee.
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Director, Babel Health & Aveanna Healthcare
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Age:
60
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Director Since:
2018 (Class II)
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Board Committees:
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•
Compliance & Quality
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Audit
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Joseph M. Zubretsky
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Business Experience
•
Has served as President and Chief Executive Officer of Molina Healthcare, Inc. since November 6, 2017
•
President and Chief Executive Officer of The Hanover Group from June 2016 to October 2017
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Chief Executive Officer and Senior Executive Vice President of Healthagen, LLC, a subsidiary of Aetna, Inc., from January 2015 to October 2015
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Senior Executive Vice President of National Businesses of Aetna, Inc. from February 2013 to December 2014, Senior Executive Vice President and Chief Financial Officer from November 2010 to February 2013, Executive Vice President and Chief Financial Officer from March 2007 to November 2010, and Chief Enterprise Risk Officer from April 2007 to February 2013
•
Senior Executive Vice President of Finance, Investments and Corporate Development of Unum Group from 2005 to 2007 and Interim Chief Financial Officer from 2006 to 2007
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Special Partner, Chief Investment Officer, and Chief Financial Officer at Brera Capital Partners from 1999 to 2005
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Executive Vice President of Business Development and Chief Financial Officer of MassMutual Financial Group from 1997 to 1999
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Member of the Boards of Directors of several companies, including The Hanover Group from 2016 to October 2017
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Certified Public Accountant (inactive)
•
Holds a B.S. in Business Administration from University of Hartford, West Hartford, CT
Skills and Qualifications
Mr. Zubretsky has more than 35 years of experience as a senior executive in strategy, operating, and finance roles in some of the world’s top insurance and financial companies including Aetna, Inc. and The Hanover Group. Since joining the Company in November 2017, Mr. Zubretsky has successfully led the Company in its turnaround and margin sustainability plan, achieving a year-over-year turnaround in net income from 2017 to 2018 in excess of $1.2 billion.
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President and Chief Executive Officer
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Age:
62
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Director Since:
2017 (Class III)
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Gov. Garrey E. Carruthers
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Business Experience
•
Chancellor of New Mexico State University from June 1, 2015 to July 1, 2018, and President from 2013 to July 1, 2018
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Served as Dean of the College of Business of New Mexico State University from 2003 to 2013
•
Served as New Mexico State University’s Vice President for Economic Development from 2006 to 2013
•
Served as the Director of the University’s Pete V. Domenici Institute since 2009
•
Was the President and Chief Executive Officer of Cimarron Health Plan in New Mexico from 1993 to 2003
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From 1987 to 1990, served a term as the Governor of the State of New Mexico
•
From 1981 to 1984, served as Assistant Secretary of the U.S. Department of the Interior
•
Holds a Ph.D. in economics from Iowa State University
Skills and Qualifications
In addition to being the former Governor of New Mexico, a former member of the Reagan Administration, and professor of economics, Gov. Carruthers also has extensive experience in the healthcare industry. Gov. Carruthers’ former service as the president and chief executive officer of Cimarron Health Plan, Inc., a managed care health plan in Albuquerque New Mexico, and the predecessor to Molina Healthcare of New Mexico, has given him broad exposure to the managed care industry. In addition, Gov. Carruthers served as a Chancellor of the New Mexico State University system, which includes the main campus and four 2-year college campuses. Prior to becoming Chancellor, Gov. Carruthers simultaneously served as the dean of the College of Business of New Mexico State University and as its vice president for economic development. Gov. Carruthers’ prior experience makes him a highly valued Board member, particularly in his role as the chairman of the compliance and quality committee, and as a member of the corporate governance and nominating committee.
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Chancellor Emeritus of New Mexico State University
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Age:
79
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Director Since:
2012 (Class I)
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Board Committees:
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•
Compliance & Quality (Chair)
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Corporate Governance & Nominating Committee
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Mr. Daniel Cooperman
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Business Experience
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Chairman of the audit committee and member of the Board of Directors of Zoox, Inc., a young robotics company developing a fully autonomous vehicle, since 2015
•
Member of the Board of Directors of LegalZoom.Com, Inc. from 2012 until its change of control in 2014; member of the Board of Directors of Nanoscale Components Inc., a lithium ion technology company, since 2012
•
Ex-Chairman and member of the Board of Directors of Second Harvest Food Bank of Santa Clara and San Mateo Counties (California), since 2010
•
Member of the Board of Directors of Liffey Thames Group, LLC dba Discovia, a legal services company, from 2011 to 2017
•
Of Counsel, DLA Piper LLP, a global law firm, from December 2014 to November 2016
•
Of Counsel, Bingham McCutchen, LLP, a global law firm, from 2010 to 2014
•
Senior Vice President, Secretary, and General Counsel of Apple Inc. from 2007 to 2009
•
Senior Vice President, Secretary, and General Counsel of Oracle Corporation from 1997 to 2007
•
Partner, McCutchen, Doyle, Brown & Enersen, LLP from 1977 to 1997
•
Distinguished Visiting Lecturer, Stanford Law School since 2010
•
Fellow, Arthur and Toni Rembe Rock Center for Corporate Governance, Stanford Law School and Graduate School of Business since 2012
•
Juris Doctorate, Stanford Law School
•
MBA, Stanford Graduate School of Business
•
Graduated Dartmouth College, summa cum laude, with an A.B. in Economics with highest distinction
Skills and Qualifications
Mr. Cooperman has extensive legal and corporate governance experience, having served as general counsel, senior vice president, and secretary of both Apple, Inc. and Oracle Corporation. Mr. Cooperman has also served as Of Counsel at two international law firms focusing on corporate and transactional matters, corporate governance, and board of director issues. Mr. Cooperman’s service as general counsel for two major US public technology companies and his extensive legal, compliance and risk management experience provide an invaluable background for his service on the Board and as chairman of both the Company’s corporate governance and nominating committee, and the Company’s information technology and cybersecurity committee. Further, Mr. Cooperman has extensive past and current board experience, having advised and served on the boards of a number of companies and trade associations.
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Former General Counsel, Oracle Corporation and Apple, Inc.
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Age:
68
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Director Since:
2013 (Class I)
|
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Board Committees:
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•
Corporate Governance & Nominating (Chair)
•
Information Technology & Cybersecurity (Chair)
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Ms. Ronna E. Romney
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Business Experience
•
Has served as director for Park-Ohio Holdings Corp., a publicly traded logistics and manufacturing company, since 2001
•
Director of Molina Healthcare of Michigan from 1999 to 2004
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Candidate for the United States Senate for the state of Michigan in 1996
•
From 1989 to 1993, appointed by President George H. W. Bush to serve as Chairwoman of the President’s Commission on White House Fellowships
•
From 1984 to 1992, served on the Republican National Committee for the state of Michigan
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From 1985 to 1989, appointed by President Ronald Reagan to serve as Chairwoman of the President’s Commission on White House Presidential Scholars
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From 1982 to 1985, appointed by President Ronald Reagan to serve as Commissioner of the President’s National Advisory Council on Adult Education
•
Political and news commentator for radio and television from 1994 to 1996
•
Honored as one of the NACD (National Association of Corporate Directors) Top 100 Directors for 2015
•
Holds a B.A from the Oakland University, Rochester, Michigan
Skills and Qualifications
Ms. Romney’s political skills, along with her extensive board and corporate governance experience, enable her to serve an invaluable role as Vice-Chair of the Board. Ms. Romney also sits on the compensation and corporate governance and nominating committees.
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Director, Park Ohio Holding Corporation
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Age:
75
|
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Director Since:
1999 (Class III); Vice-Chair of the Board
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Board Committees:
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•
Compensation
•
Corporate Governance & Nominating
|
Mr. Richard M. Schapiro
|
Business Experience
•
In 2018, Mr. Schapiro achieved Board Leadership Fellow status, completed the NACD/ Carnegie Mellon Cyber-Security Course and was selected for inclusion in the 2018 NACD Directorship100, recognizing individual directors who serve as role models promoting exemplary board leadership, oversight, and courage in the boardroom
•
Since April 2015, served as Chief Executive Officer of SchapiroCo LLC
•
Since January 2017, served as an independent director for Transamerica Corporation, and from April 2015 to January 2017, served as independent director for Transamerica Financial Life Insurance Company
•
From 1999 to 2014, served as a Managing Director in the Corporate and Investment Banking Division of Bank of America Merrill Lynch’s Health Care Group (retired)
•
From 1997 to 1999, served as Managing Director and Head of Health Care Group for ING Baring Furman Selz
•
From 1979 to 1997, held various positions at Salomon Brothers Inc., serving as Managing Director and Global Co-Head of the Health Care Group, Managing Director - Insurance Group, Managing Director and Head of Government Finance Group, and Managing Director and Head of Thrift Coverage Group
•
Bachelor of Science Degree in Accounting from Case Western Reserve University
•
Master’s Degree in Business Administration from Bernard M. Baruch College
•
Juris Doctorate from New York Law School
Skills and Qualifications
Mr. Schapiro is a former investment and corporate banker with thirty-five years of experience covering the financial services and healthcare sectors. Mr. Schapiro’s past experience as an investment banker positions him to assist management in matters related to capital structure, debt and equity financings and mergers and acquisitions. Mr. Schapiro also advised the Company in connection with its 2003 IPO and subsequent follow-on offering, giving him invaluable insight into the history and growth of the Company.
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Chief Executive Officer, SchapiroCo LLC
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Age:
63
|
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Director Since:
2015 (Class I)
|
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Board Committees:
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|
•
Compensation (Chair)
•
Audit
•
Information Technology & Cybersecurity
•
Finance
|
Mr. Dale B. Wolf
|
Business Experience
•
Has served as President and Chief Executive Officer of Onecall Care Management from January 2016 to February 2019, and Executive Chairman from September 2015 to January 2016
•
President and CEO, DBW Healthcare, Inc. from January 2014 to June 2018
•
Executive Chairman, Correctional Healthcare Companies, Inc., a national provider of correctional healthcare solutions, from December 2012 to July 2014
•
Chief Executive Officer of Coventry Health Care, Inc. from 2005 to 2009
•
Executive Vice President, Chief Financial Officer, and Treasurer of Coventry Health Care, Inc. from 1996 to 2005
•
Member of the Board of Directors of Correctional Healthcare Companies, Inc. from December 2012 to July 2014
•
Member of the Board of Directors of Coventry Healthcare, Inc. from January 2005 to April 2009
•
Member of the Board of Directors of Catalyst Health Solutions, Inc. from 2003 to 2012
•
Graduated Eastern Nazarene College with a Bachelor of Arts degree in Mathematics, with honors
•
Completed MIT Sloan School Senior Executive Program
•
Fellow in the Society of Actuaries since 1979
Skills and Qualifications
Mr. Wolf is an experienced healthcare executive with visionary leadership skills. Mr. Wolf has served in multiple leadership roles, including chief executive officer and chief financial officer of Coventry Healthcare, a health insurer now owned by Aetna, and on the boards of several notable healthcare companies. Mr. Wolf’s extensive managerial and executive healthcare experience, as well as his familiarity with the managed care industry, render him an invaluable asset in helping to formulate and oversee the Company’s long-term business strategy.
|
|
|
Chairman of the Board, Molina Healthcare, Inc.
|
|
Age:
64
|
|
Director Since:
2013 (Class III)
|
|
Board Committees:
|
|
•
Corporate Governance & Nominating
•
Compliance & Quality
•
Finance (Chair)
|
Non-Executive Director Fee
|
Non-executive directors received an annual cash retainer in the amount of $100,000.
|
Non-Executive Chairman of the Board Fee
|
The non-executive chairman of the Board received an additional annual cash fee of $175,000.
|
Vice Chair of the Board Fee
|
The vice-chair of the Board received an additional annual cash fee of $30,000.
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Audit Committee Fee
|
The chairperson of the audit committee received an additional annual cash fee of $27,500, and each member received $15,000.
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Corporate Governance and Nominating Committee Fees
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The chairperson of the corporate governance and nominating committee received an additional cash fee of $22,500, and each member received $12,500.
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Compensation Committee Fees
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The chairperson of the compensation committee received an additional cash fee of $22,500, and each member received $12,500.
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Compliance and Quality Committee Fees
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The chairperson of the compliance and quality committee received an additional cash fee of $22,500, and each member received $12,500.
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Information Technology and Cybersecurity Committee Fees
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The chairperson of the information technology and cybersecurity committee received an additional cash fee of $11,250, and each member received $6,250.
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Finance Committee Fees
|
The members of the finance committee (including the chairperson) received an additional prorated cash fee based on an annual fee of $15,000 from November 7, 2018, when the finance committee was established.
|
Name
|
Fees Earned
or Paid
in Cash
|
|
Stock
Awards
(1)
|
|
All Other
Compensation
|
|
Total
|
||||||||
Garrey E. Carruthers, Ph.D.
|
$
|
135,000
|
|
|
$
|
220,022
|
|
|
$
|
—
|
|
|
$
|
355,022
|
|
Daniel Cooperman
(2)
|
$
|
148,547
|
|
|
$
|
220,022
|
|
|
$
|
—
|
|
|
$
|
368,569
|
|
Charles Z. Fedak
|
$
|
127,500
|
|
|
$
|
220,022
|
|
|
$
|
—
|
|
|
$
|
347,522
|
|
John C. Molina
(3)
|
$
|
28,125
|
|
|
$
|
54,980
|
|
|
$
|
—
|
|
|
$
|
83,105
|
|
Steven J. Orlando
|
$
|
148,493
|
|
|
$
|
220,022
|
|
|
$
|
—
|
|
|
$
|
368,515
|
|
Ronna E. Romney
|
$
|
155,000
|
|
|
$
|
220,022
|
|
|
$
|
—
|
|
|
$
|
375,022
|
|
Richard M. Schapiro
|
$
|
145,993
|
|
|
$
|
220,022
|
|
|
$
|
—
|
|
|
$
|
366,015
|
|
Dale B. Wolf
(2)
|
$
|
302,242
|
|
|
$
|
220,022
|
|
|
$
|
—
|
|
|
$
|
522,264
|
|
Richard C. Zoretic
(4)
|
$
|
53,010
|
|
|
$
|
91,420
|
|
|
$
|
—
|
|
|
$
|
144,430
|
|
(1)
|
The amounts reported as Stock Awards reflect the grant date fair value of restricted stock awards under the Company’s 2011 Equity Incentive Plan, in accordance with Accounting Standards Codification Topic 718, “Compensation - Stock Compensation.” The non-employee directors’ compensation program described above provides for an annual equity award valued at $220,000 for each director, or $55,000 per quarter.
|
(2)
|
Messrs. Cooperman and Wolf each have fully vested options to purchase 15,000 shares of our stock at an exercise price of $33.02 per share which expire on March 11, 2023.
|
(3)
|
Mr. Molina resigned from the Board effective as of February 23, 2018.
|
(4)
|
Mr. Zoretic was elected to the Board effective as of August 1, 2018.
|
ü
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
THE PROPOSAL TO APPROVE THE ADVISORY RESOLUTION APPROVING THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DESCRIBED IN THIS PROXY STATEMENT.
|
•
|
Joseph M. Zubretsky, president and chief executive officer;
|
•
|
Thomas L. Tran, chief financial officer;
|
•
|
Jeff D. Barlow, chief legal officer and secretary;
|
•
|
Pamela S. Sedmak, executive vice president of health plan operations;
|
•
|
Mark L. Keim, executive vice president of strategic planning and corporate development; and
|
•
|
Joseph W. White, former chief financial officer.
|
•
|
Joseph M. Molina and John C. Molina were terminated by the Board of Directors specifically because of the Company’s poor financial performance;
|
•
|
The severance payments triggered by the terminations were dictated by the terms of the founder-executives’ employment agreements, and were therefore contractual and non-discretionary;
|
•
|
The severance rights triggered in 2017 were put into place in 2002 prior to the Company’s initial public offering, and were not the product of any action by the members of the compensation committee; and
|
•
|
The Board and the compensation committee acted in the best interests of the Company and our stockholders by terminating Joseph M. Molina and John C. Molina, notwithstanding the significant severance payments incidentally triggered thereby, a decision which the Board and the compensation committee believe was validated by the Company’s subsequent financial results and stock price performance.
|
What We Do
|
What We Don’t Do
|
Maintain stock ownership guidelines for directors and executive officers. In early 2018, such guidelines were revised to increase the ownership holdings to four (4) times the annual cash retainer for directors.
|
No guaranteed bonuses.
|
Have an incentive compensation clawback policy.
|
No gross-ups on excise taxes.
|
Enforce restrictions on “pledges” of shares of Company stock by directors and executive officers.
|
Do not grant discounted stock options.
|
Restrict hedging transactions by directors and executive officers.
|
Do not permit repricing of stock options without stockholder approval.
|
Engage an independent compensation consultant.
|
Do not provide above-market earnings on deferred compensation.
|
Provide very limited perquisites.
|
|
Provide for director equity award limits in our equity incentive plan.
|
|
•
|
Improving the efficiency of our administrative cost profile;
|
•
|
Strengthening our balance sheet by reducing our outstanding indebtedness;
|
•
|
Revamping the contract procurement process;
|
•
|
Realigning management incentive programs with our strategic objectives;
|
•
|
Divesting non-core businesses; and
|
•
|
Producing strong financial results, which have exceeded our initial and revised guidance and expectations.
|
Named Executive Officer
|
2018 Bonus Opportunity (% of Base Salary)
|
|
Joseph M. Zubretsky
|
|
|
President and Chief Executive Officer
|
150
|
%
|
Thomas L. Tran
|
|
|
Chief Financial Officer
|
100
|
%
|
Jeff D. Barlow
|
|
|
Chief Legal Officer and Secretary
|
100
|
%
|
Pamela S. Sedmak
|
|
|
Executive Vice President of Health Plan Operations
|
70
|
%
|
Mark L. Keim
|
|
|
Executive Vice President of Strategic Planning and Corporate Development
|
70
|
%
|
Joseph W. White
|
|
|
Former Chief Financial Officer
|
100
|
%
|
|
Base Salary
|
|||||||
Named Executive Officer
|
2018
|
2017
|
Change ($)
|
Change (%)
|
||||
Joseph M. Zubretsky, President and Chief Executive Officer
|
$
|
1,300,000
|
|
$
|
1,300,000
|
|
—
|
—
|
Thomas L. Tran, Chief Financial Officer
|
$
|
700,000
|
|
N/A
|
N/A
|
N/A
|
||
Jeff D. Barlow, Chief Legal Officer and Secretary
|
$
|
600,000
|
|
$
|
550,000
|
|
$50,000
|
9.09%
|
Pamela S. Sedmak, Executive Vice President of Health Plan Operations
(1)
|
$
|
750,000
|
|
N/A
|
N/A
|
N/A
|
||
Mark L. Keim, Executive Vice President of Strategic Planning and Corporate Development
(2)
|
$
|
600,000
|
|
N/A
|
N/A
|
N/A
|
||
Joseph W. White, Former Chief Financial Officer
(3)
|
$
|
650,000
|
|
$
|
650,000
|
|
—
|
—
|
Named Executive Officer
|
2018 Target Cash Bonus Opportunity (% of Base Salary)
|
|
Joseph M. Zubretsky
|
|
|
President and Chief Executive Officer
|
150
|
%
|
Thomas L. Tran
(1)
|
|
|
Chief Financial Officer
|
100
|
%
|
Jeff D. Barlow
|
|
|
Chief Legal Officer and Secretary
|
100
|
%
|
Pamela S. Sedmak
|
|
|
Executive Vice President of Health Plan Operations
|
70
|
%
|
Mark L. Keim
|
|
|
Executive Vice President of Strategic Planning and Corporate Development
|
70
|
%
|
Joseph W. White
|
|
|
Former Chief Financial Officer
|
100
|
%
|
(1)
|
Mr. Tran’s bonus is subject to proration based on his June 2018 start date.
|
•
|
70% of the bonus opportunity was based on the Company’s pre-tax income achievement in 2018. On February 12, 2018, the Company had issued fiscal year 2018 net income guidance of $3.00 to $3.25 per share, representing 2018 pre-tax income of between $355 million and $400 million. The compensation committee established as a target short-term incentive bonus a pre-tax income amount well in excess of the top-end of the range of 2018 guidance, with a maximum payout established approximately 30% above the Company’s preliminary 2018 guidance.
|
•
|
30% of the bonus opportunity was subject to the compensation committee's evaluation of each executive's individual performance, and was based upon consideration by the committee of a wide variety of factors closely aligned with the chief executive officer’s goals and objectives, including, but not limited to, such factors as: (1) performance and operational improvements; (2) talent identification and succession planning; (3) financial planning and capital management; (4) development of a long term strategic plan; and miscellaneous other factors as may be identified by the compensation committee in the exercise of its discretion. As with the pre-tax income metric, payment of the individual performance bonus was capped at the 200% level.
|
Named Executive Officer
|
Base Salary
|
|
Target Bonus
Opportunity
(% of Base Salary)
|
|
Total Target Bonus Opportunity (100%)
|
|
Maximum Bonus Opportunity (200%)
|
Bonus Paid
|
|||||||||
Joseph M. Zubretsky
|
|
|
|
|
|
|
|
|
|||||||||
President and Chief Executive Officer
|
$
|
1,300,000
|
|
|
150
|
%
|
|
$
|
1,950,000
|
|
|
$
|
3,900,000
|
|
$
|
3,900,000
|
|
Thomas L. Tran
(1)
|
|
|
|
|
|
|
|
|
|||||||||
Chief Financial Officer
|
$
|
700,000
|
|
|
100
|
%
|
|
$
|
466,667
|
|
|
$
|
933,333
|
|
$
|
933,333
|
|
Jeff D. Barlow
|
|
|
|
|
|
|
|
|
|||||||||
Chief Legal Officer and Secretary
|
$
|
600,000
|
|
|
100
|
%
|
|
$
|
600,000
|
|
|
$
|
1,200,000
|
|
$
|
1,200,000
|
|
Pamela S. Sedmak
(2)
|
|
|
|
|
|
|
|
|
|||||||||
Executive Vice President of Health Plan Operations
|
$
|
750,000
|
|
|
70
|
%
|
|
$
|
455,000
|
|
|
$
|
910,000
|
|
$
|
910,000
|
|
Mark L. Keim
(4)
|
|
|
|
|
|
|
|
|
|||||||||
Executive Vice President of Strategic Planning and Corporate Development
|
$
|
600,000
|
|
|
70
|
%
|
|
$
|
373,333
|
|
|
$
|
746,667
|
|
$
|
746,667
|
|
Joseph W. White
(5)
|
|
|
|
|
|
|
|
|
|||||||||
Former Chief Financial Officer
|
$
|
650,000
|
|
|
100
|
%
|
|
$
|
455,000
|
|
|
$
|
910,000
|
|
$
|
—
|
|
|
Performance Stock Units
|
Restricted Stock Awards
|
|
|||||||||||
Named Executive Officer
|
PSUs (#)
|
PSUs ($)
|
RSAs Total (#)
|
RSAs Total ($)
|
Total (#)
|
Total ($)
|
||||||||
Joseph M. Zubretsky
(1)
|
83,472
|
|
$
|
5,999,967
|
|
55,648
|
|
$
|
3,999,978
|
|
139,120
|
|
9,999,945
|
|
Thomas L. Tran
(2)
|
14,237
|
|
$
|
1,200,037
|
|
9,491
|
|
$
|
799,996
|
|
23,728
|
|
2,000,033
|
|
Jeff D. Barlow
(3)
|
12,521
|
|
$
|
900,009
|
|
22,259
|
|
$
|
1,599,977
|
|
34,780
|
|
2,499,986
|
|
Pamela S. Sedmak
|
6,260
|
|
$
|
449,969
|
|
4,174
|
|
$
|
300,027
|
|
10,434
|
|
749,996
|
|
Mark L. Keim
(4)
|
6,260
|
|
$
|
449,969
|
|
4,174
|
|
$
|
300,027
|
|
10,434
|
|
749,996
|
|
Joseph W. White
(5)
|
26,433
|
|
$
|
1,900,004
|
|
—
|
|
$
|
—
|
|
26,433
|
|
1,900,004
|
|
Name and Principal Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
(1)
|
Option Awards
|
Non-Equity
Incentive Plan
Comp.
(2)
|
Change in
Nonqualified
Deferred
Comp.
Earnings
(3)
|
All Other
Comp.
(4)
|
Total
|
||||||||||||||||
Joseph M. Zubretsky
(5)(6)
|
2018
|
$
|
1,300,000
|
|
$
|
—
|
|
$
|
9,999,946
|
|
$
|
—
|
|
$
|
3,900,000
|
|
$
|
—
|
|
$
|
19,824
|
|
$
|
15,219,770
|
|
President and Chief Executive Officer
|
2017
|
$
|
175,000
|
|
$
|
4,000,000
|
|
$
|
—
|
|
$
|
15,536,250
|
|
$
|
—
|
|
$
|
—
|
|
$
|
27,858
|
|
$
|
19,739,108
|
|
Thomas L. Tran
(5)(7)
|
2018
|
$
|
409,231
|
|
$
|
126,668
|
|
$
|
2,000,033
|
|
$
|
—
|
|
$
|
933,333
|
|
$
|
—
|
|
$
|
14,762
|
|
$
|
3,484,027
|
|
Chief Financial Officer
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Jeff D. Barlow
(3)
|
2018
|
$
|
599,039
|
|
$
|
—
|
|
$
|
2,499,986
|
|
$
|
—
|
|
$
|
1,200,000
|
|
$
|
—
|
|
$
|
38,979
|
|
$
|
4,338,004
|
|
Chief Legal Officer and Secretary
|
2017
|
$
|
550,000
|
|
$
|
—
|
|
$
|
1,616,103
|
|
$
|
—
|
|
$
|
—
|
|
$
|
27,041
|
|
$
|
33,681
|
|
$
|
2,226,825
|
|
|
2016
|
$
|
525,000
|
|
$
|
—
|
|
$
|
2,021,015
|
|
$
|
—
|
|
$
|
75,000
|
|
$
|
8,395
|
|
$
|
33,545
|
|
$
|
2,662,955
|
|
Pamela S. Sedmak
(5)(8)
|
2018
|
$
|
576,923
|
|
$
|
159,972
|
|
$
|
749,996
|
|
$
|
—
|
|
$
|
910,000
|
|
$
|
—
|
|
$
|
12,105
|
|
$
|
2,408,996
|
|
Executive Vice President of Health Plan Operations
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Mark L. Keim
(5)(9)
|
2018
|
$
|
507,692
|
|
$
|
1,844,542
|
|
$
|
749,996
|
|
$
|
—
|
|
$
|
746,667
|
|
$
|
—
|
|
$
|
14,419
|
|
$
|
3,863,316
|
|
Executive Vice President of Strategic Planning and Corporate Development
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Joseph W. White
(10)
|
2018
|
$
|
295,000
|
|
$
|
—
|
|
$
|
1,900,004
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,644,762
|
|
$
|
3,839,766
|
|
Former Chief Financial Officer
|
2017
|
$
|
1,248,167
|
|
$
|
—
|
|
$
|
3,361,920
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,821
|
|
$
|
40,232
|
|
$
|
4,653,140
|
|
|
2016
|
$
|
538,000
|
|
$
|
—
|
|
$
|
2,786,018
|
|
$
|
—
|
|
$
|
80,000
|
|
$
|
1,377
|
|
$
|
15,033
|
|
$
|
3,420,428
|
|
(1)
|
This column shows the aggregate grant date fair value of performance stock units (“PSUs”) and restricted stock awards (“RSAs”) granted under the Company’s 2011 Equity Incentive Plan in the years shown. The aggregate grant date fair value is the amount the Company expects to expense for accounting purposes over the award’s vesting schedule. See the
2018 Grants of Plan-Based Awards Table
for additional information, including the performance conditions and valuation assumptions as applicable, for PSUs and RSAs granted in
2018
.
|
(2)
|
This column shows the amounts earned under the Company’s performance-based short-term cash incentive plan.
|
(3)
|
Mr. Barlow’s change in non-qualified deferred compensation earnings for the year 2018 was ($8,545). Mr. White’s change in non-qualified deferred compensation earnings for the year 2018 was ($729).
|
(4)
|
Details are provided below in the
2018 All Other Compensation Table
.
|
(5)
|
Compensation for Mr. Zubretsky is not provided for 2016 because he was not a named executive officer during 2016. Mr. Zubretsky’s employment with the Company started on November 6, 2017. Compensation for Mr. Tran, Ms. Sedmak, and Mr. Keim is only provided for 2018 because their employment with the Company started in 2018 and thus they were not named executive officers prior to 2018.
|
(6)
|
Mr. Zubretsky’s employment with the Company commenced on November 6, 2017, and as a result the salary amount for 2017 is the amount paid for the period November 6, 2017 to December 31, 2017, at an annualized salary of $1,300,000. Mr.
|
(7)
|
The amount in the Bonus column represents Mr. Tran’s sign-on bonus.
|
(8)
|
The amount in the Bonus column represents Ms. Sedmak’s sign-on bonus.
|
(9)
|
Mr. Keim’s bonus consists of the following: (1) $544,577 sign-on cash bonus; (2) $300,000 make-whole payment for bonus amounts forgone at his previous employer; and (3) a restricted stock award of 11,756 shares of the Company’s common stock, with a grant date fair value of $999,965 on January 10, 2018, as a sign-on bonus for joining the Company, which vests in one-fourth increments over four years from the grant date, on each of January 10, 2019, January 10, 2020, January 10, 2021, and January 10, 2022.
|
(10)
|
Mr. White retired from the Company on June 6, 2018.
|
Name
|
Group Term Life Premiums
|
401(k) Matching Contribution
(1)
|
Liquidated Amounts for Paid Time-off
|
Retirement Departure Payment
|
Remote Stipend
|
All Other Compensation
|
||||||||||||
Joseph M. Zubretsky
|
$
|
7,524
|
|
$
|
11,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,300
|
|
$
|
19,824
|
|
Thomas L. Tran
|
$
|
3,762
|
|
$
|
11,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
14,762
|
|
Jeff D. Barlow
|
$
|
4,902
|
|
$
|
11,000
|
|
$
|
23,077
|
|
$
|
—
|
|
$
|
—
|
|
$
|
38,979
|
|
Pamela S. Sedmak
|
$
|
3,582
|
|
$
|
7,423
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,100
|
|
$
|
12,105
|
|
Mark L. Keim
|
$
|
2,219
|
|
$
|
11,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,200
|
|
$
|
14,419
|
|
Joseph W. White
|
$
|
3,762
|
|
$
|
11,000
|
|
$
|
130,000
|
|
$
|
1,500,000
|
|
$
|
—
|
|
$
|
1,644,762
|
|
(1)
|
The Company has a 401(k) plan that is available to all employees. The plan allows pretax deferral, for which the Company matches dollar-for-dollar of the first 4% of salary electively deferred under the plan.
|
Name
|
Grant Date
|
Grant Type *
|
Estimated Possible Payouts
Under Non-Equity Incentive Plan Awards (1) |
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards
(2)
|
All Other
Stock
Awards:
Number of
Shares of
Stock
|
Grant
Date
Fair
Value of
Stock
and
Option
Awards
(6)
|
||||||||||||||||||
Threshold ($)
|
Target
($)
|
Maximum ($)
|
|
Threshold (#)
|
Target
(#)
|
Maximum (#)
|
|||||||||||||||||||
Joseph M. Zubretsky
|
2/27/2018
|
STI Cash
|
$
|
682,500
|
|
$
|
1,365,000
|
|
$
|
2,730,000
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
$
|
—
|
|
|
3/1/2018
|
PSU
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
41,736
|
|
83,472
|
|
166,944
|
|
—
|
|
|
$
|
5,999,967
|
|
||
|
3/1/2018
|
RSA
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
—
|
|
—
|
|
—
|
|
55,648
|
|
(3
|
)
|
$
|
3,999,978
|
|
Thomas L. Tran
|
5/24/2018
|
STI Cash
|
$
|
163,333
|
|
$
|
326,667
|
|
$
|
653,333
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
$
|
—
|
|
|
5/24/2018
|
PSU
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
7,119
|
|
14,237
|
|
28,474
|
|
—
|
|
|
$
|
1,200,037
|
|
|
|
5/24/2018
|
RSA
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
—
|
|
—
|
|
—
|
|
9,491
|
|
(4
|
)
|
$
|
799,996
|
|
Jeff D. Barlow
|
2/27/2018
|
STI Cash
|
$
|
210,000
|
|
$
|
420,000
|
|
$
|
840,000
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
$
|
—
|
|
|
|
3/1/2018
|
PSU
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
6,261
|
|
12,521
|
|
25,042
|
|
—
|
|
|
|
$
|
900,009
|
|
|
3/1/2018
|
RSA
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
—
|
|
—
|
|
—
|
|
22,259
|
|
(3
|
)
|
$
|
1,599,977
|
|
Pamela S. Sedmak
|
2/27/2018
|
STI Cash
|
$
|
159,250
|
|
$
|
318,500
|
|
$
|
637,000
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
$
|
—
|
|
|
|
3/1/2018
|
PSU
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
3,130
|
|
6,260
|
|
12,520
|
|
—
|
|
|
$
|
449,969
|
|
|
|
3/1/2018
|
RSA
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
—
|
|
—
|
|
—
|
|
4,174
|
|
(3
|
)
|
$
|
300,027
|
|
Mark L. Keim
|
1/10/2018
|
RSA
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
—
|
|
—
|
|
—
|
|
11,756
|
|
(5
|
)
|
$
|
999,965
|
|
|
2/27/2018
|
STI Cash
|
$
|
130,667
|
|
$
|
261,333
|
|
$
|
522,667
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
$
|
—
|
|
|
|
3/1/2018
|
PSU
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
3,130
|
|
6,260
|
|
12,520
|
|
—
|
|
|
$
|
449,969
|
|
|
|
3/1/2018
|
RSA
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
—
|
|
—
|
|
—
|
|
4,174
|
|
(3
|
)
|
$
|
300,027
|
|
Joseph W. White
(7)
|
2/27/2018
|
STI Cash
|
$
|
227,500
|
|
$
|
455,000
|
|
$
|
910,000
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
$
|
—
|
|
|
|
3/1/2018
|
PSU
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
13,217
|
|
26,433
|
|
52,866
|
|
—
|
|
(3
|
)
|
$
|
1,900,004
|
|
*
|
STI Cash=short-term incentive awards; PSU=performance stock units; RSA=restricted stock awards.
|
(1)
|
These columns show the possible payouts under the Company’s performance-based short-term cash incentive plan. The individual performance portion of the short-term cash incentive bonus is excluded from the table above. Under this plan, Mr. Zubretsky’s bonus opportunity is 150% of his base salary; Mr. Tran’s bonus opportunity is 100% of his base salary; Mr. Barlow’s bonus opportunity is 100% of his base salary; Ms. Sedmak’s bonus opportunity is 70% of her base salary; and Mr. Keim’s bonus opportunity is 70% of his base salary. Mr. White’s bonus opportunity prior to his retirement in July 2018 was 100% of his base salary. For each of the named executives, 70% of the bonus opportunity related to a pre-tax income performance measure and 30% was subject to the compensation committee’s evaluation of each executive’s individual performance. The target bonus level was based on the achievement of pre-tax income in 2018 that was above the high end of the range of the Company’s 2018 preliminary guidance. See further discussion regarding these metrics at “
Compensation Discussion and Analysis
-Elements of Compensation.” The actual amounts earned and paid to the named executive officers under the 2018 plan are presented in the “
2018 Summary Compensation Table
-Non-Equity Incentive Plan Comp.”
|
(2)
|
These columns show the estimated future payouts of PSUs under the awards granted in 2018. For each of the named executive officers, with respect to the PSUs granted in 2018, the vesting of the PSUs is based entirely on the achievement of a single financial metric: the Company’s cumulative net income over the three fiscal years of 2018, 2019, and 2020. At the time of grant we believed it would be marginally difficult for the Company to achieve the threshold cumulative net income level, which would result in vesting at the 50% level. Further, we believed it would be difficult but achievable to reach the target cumulative net income level, which would result in vesting at the 100% level. Finally, at the time of grant we believed it would be possible but not probable to achieve the maximum cumulative net income level, which would result in vesting at the 200% level, which represents the cap on achievement. The PSUs will be settled by the issuance of shares of common stock of the Company equal to the number of PSUs as described herein, with all amounts interpolated linearly. Because of the Company’s very strong financial performance in 2018, which exceeded our initial expectations at the time the metrics were established, the Company believes that the probability of achievement at the maximum level as of the end of 2020 has been significantly increased.
|
(3)
|
Includes the RSAs granted to named executive officers on March 1, 2018. These awards are subject to time-based vesting in equal increments over three years on each of March 1, 2019, March 1, 2020, and March 1, 2021.
|
(4)
|
Pursuant to Mr. Tran’s employment agreement, on May 24, 2018, the Company granted him RSAs. These awards are subject to time-based vesting in equal increments over three years on each of May 24, 2019, May 24, 2020, and May 24, 2021.
|
(5)
|
Pursuant to Mr. Keim’s employment agreement, on January 10, 2018, the Company granted him RSAs. These awards are subject to time-based vesting in equal increments over four years on each of January 10, 2019, January 10, 2020, January 10, 2021, and January 10, 2022.
|
(6)
|
This column shows the grant date fair value of the PSUs and RSAs. Generally, the grant date fair value is the amount that the Company expects to expense in its financial statements over the awards’ or options’ vesting schedule.
|
(7)
|
Mr. White retired from the Company on June 6, 2018.
|
|
Option Awards
|
|
Stock and Stock Unit Awards
|
||||||||||||||||||||
Name
|
Option Grant Date
|
Number of
Securities
Underlying
Unexercised
Options (Exercisable)
|
|
Number of
Securities
Underlying
Unexercised
Options
(Unexercisable)
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Options (Unearned)
|
|
Option
Exercise
Price
|
|
Option
Expiration
Date
|
|
Stock Award Grant Date
|
Number of
Shares of
Stock
That
Have Not
Vested
|
|
Market
Value of
Shares of
Stock
That
Have Not
Vested
(1)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares
That Have
Not
Vested
|
|
Equity
Incentive
Plan
Awards:
Market
or Pay-
Out
Value of
Unearned
Shares
That
Have
Not
Vested
(1)
|
|
|||
Joseph M. Zubretsky
|
11/6/2017
|
125,000
|
|
250,000
|
|
—
|
|
$
|
67.33
|
|
10/8/2027
|
|
|
—
|
|
$
|
—
|
|
—
|
|
$
|
—
|
|
|
|
|
—
|
|
—
|
|
|
|
|
3/1/2018
|
55,648
|
|
$
|
6,467,411
|
|
83,472
|
|
$
|
9,701,116
|
|
|||
Thomas L. Tran
|
|
|
—
|
|
—
|
|
|
|
|
5/24/2018
|
9,491
|
|
$
|
1,103,044
|
|
14,237
|
|
$
|
1,654,624
|
|
|||
Jeff D. Barlow
|
|
|
—
|
|
—
|
|
|
|
|
3/7/2016
|
3,131
|
|
$
|
363,885
|
|
3,132
|
|
$
|
364,001
|
|
|||
|
|
|
|
|
|
|
|
3/1/2017
|
6,316
|
|
$
|
734,046
|
|
—
|
|
$
|
—
|
|
|||||
|
|
|
|
|
|
|
|
5/10/2017
|
—
|
|
$
|
—
|
|
16,844
|
|
$
|
1,957,610
|
|
|||||
|
|
|
|
|
|
|
|
3/1/2018
|
22,259
|
|
$
|
2,586,941
|
|
12,521
|
|
$
|
1,455,191
|
|
|||||
Total
|
|
|
|
—
|
|
—
|
|
|
|
|
|
31,706
|
|
$
|
3,684,872
|
|
32,497
|
|
$
|
3,776,802
|
|
||
Pamela S. Sedmak
|
|
|
—
|
|
—
|
|
|
|
|
3/1/2018
|
4,174
|
|
$
|
485,102
|
|
6,260
|
|
$
|
727,537
|
|
|||
Mark L. Keim
|
|
|
—
|
|
—
|
|
|
|
|
1/10/2018
|
11,756
|
|
$
|
1,366,282
|
|
—
|
|
$
|
—
|
|
|||
|
|
|
|
|
|
|
|
3/1/2018
|
4,174
|
|
$
|
485,102
|
|
6,260
|
|
$
|
727,537
|
|
|||||
Total
|
|
|
—
|
|
—
|
|
|
|
|
|
15,930
|
|
$
|
1,851,384
|
|
6,260
|
|
$
|
727,537
|
|
(1)
|
The market value of the unvested RSAs, PSAs, and PSUs represents the product of the closing price of the Company’s stock as of December 31, 2018, the last trading day of our fiscal year, which was $116.22, and the number of shares underlying such award and, with respect to PSAs and PSUs, assumes satisfaction of the applicable performance conditions at the target level. See the
Outstanding Equity Awards Vesting Schedule Table
on the next page for more information regarding vesting of these awards.
|
Name of Executive Officer
|
|
Grant Date
|
|
Stock Awards and Units Vesting Schedule
(1)
|
|||
|
|
Vested
|
Subject to Vesting
|
||||
|
|
PSAs/PSUs
|
RSAs
|
PSUs
|
RSAs
|
||
Joseph M. Zubretsky
|
|
3/1/2018
|
|
|
18,550 RSAs vested in 2019
|
83,472 PSUs vest 3/1/2021, subject to performance condition
|
18,549 RSAs vest 3/1/2020; 18,549 RSAs vest 3/1/2021
|
Thomas L. Tran
|
|
5/24/2018
|
|
|
3,164 RSAs vest in 2019
|
14,237 PSUs vest 3/1/2021, subject to performance condition
|
3,164 RSAs vest 5/24/2020; 3,163 RSAs vest 5/24/2021
|
Jeff D. Barlow
|
|
3/7/2016
|
|
3,132 PSAs vested in 2019
|
3,131 RSAs vested in 2019
|
|
|
|
|
3/1/2017
|
|
|
3,158 RSAs vested in 2019
|
|
3,158 RSAs vest 3/1/2020
|
|
|
5/10/2017
|
|
10,528 PSUs vested in 2019
|
|
6,316 PSUs vest 3/1/2020, subject to performance conditions
|
|
|
|
3/1/2018
|
|
|
7,421 RSAs vested in 2019
|
12,521 PSUs vest 3/1/2021, subject to performance conditions
|
7,419 RSAs vest 3/1/2020; 7,419 RSAs vest 3/1/2021
|
Pamela S. Sedmak
|
|
3/1/2018
|
|
|
1,392 RSAs vested in 2019
|
6,260 PSUs vest 3/1/2021, subject to performance conditions
|
1,391 RSAs vest 3/1/2020; 1,391 RSAs vest 3/1/2021
|
Mark L. Keim
|
|
1/10/2018
|
|
|
2,939 RSAs vested in 2019
|
|
2,939 RSAs vest 1/10/2020; 2,939 RSAs vest 1/10/2021; 2,939 RSAs vest 1/10/2022
|
|
|
3/1/2018
|
|
|
1,392 RSAs vested in 2019
|
6,260 PSUs vest 3/1/2021, subject to performance conditions
|
1,391 RSAs vest 3/1/2020; 1,391 RSAs vest 3/1/2021
|
(1)
|
This column shows the vesting schedule for unvested or unearned stock awards reported in the “Number of Shares of Stock That Have Not Vested,” and “Equity Incentive Plan Awards: Number of Unearned Shares That Have Not Vested” columns of the
2018 Outstanding Equity Awards at Fiscal Year End Table
. RSAs vest on the dates indicated above. PSAs and PSUs vest subject to the achievement of performance conditions, on the date the compensation committee certifies the achievement of such performance conditions. See the
Outstanding Performance-Based Equity Awards Table
for more information on these awards.
|
Performance Goals
|
|
Name
|
|
Performance Period:
Fiscal Year(s)
|
|||||||||||
Metric
|
Entry Point
|
Target Achievement
|
Full Achievement
|
Grant Date
|
Joseph M. Zubretsky
|
Thomas L. Tran
|
Jeff D. Barlow
|
Pamela S. Sedmak
|
Mark L. Keim
|
||||||
Net Profit Margin (after-tax)
(1)
|
1.5%
|
|
2.0%
|
3/7/2016
|
—
|
|
—
|
|
3,132
|
|
—
|
|
—
|
|
2018
|
Net Profit Margin (after-tax)
(2)
|
1.0%
|
1.25%
|
1.5%
|
5/10/2017
|
—
|
|
—
|
|
3,948
|
|
—
|
|
—
|
|
2018
|
Net Profit Margin (after-tax)
(3)
|
1.5%
|
1.8%
|
2.0%
|
5/10/2017
|
—
|
|
—
|
|
3,684
|
|
—
|
|
—
|
|
2019
|
RFP/Acquisition
(4)
|
|
|
|
5/10/2017
|
—
|
|
—
|
|
5,264
|
|
—
|
|
—
|
|
2017-2019
|
3-year Cumulative Net Income
(5)
|
|
|
|
3/1/2018
|
83,472
|
|
14,237
|
|
12,521
|
|
6,260
|
|
6,260
|
|
2018 - 2020
|
Total
|
|
|
|
|
83,472
|
|
14,237
|
|
28,549
|
|
6,260
|
|
6,260
|
|
|
(1)
|
Awards vested on March 7, 2019.
|
(2)
|
Awards vested on March 1, 2019.
|
(3)
|
Net profit margin is based on the Company’s reported income from continuing operations, divided by total revenue. Achievement of the entry point shall result in 50% of the PSUs subject to this metric; target achievement shall result in 100% vesting of the PSUs; and full achievement shall result in 200% vesting of the PSU grant. Intermediate achievement within the range shall result in the vesting of that number of shares as is proportional to the level of achievement within the range; all amounts shall be interpolated linearly between the end points of the range. If achieved, the awards, in the table above, subject to this metric will vest on March 1, 2020.
|
(4)
|
This metric is conditioned on the Company’s closing on a Board-approved acquisition in a new state, winning a request for proposal (“RFP”) in a new state (including winning an RFP for Molina Medicaid Solutions, or winning an RFP for a new Medicaid product line in an existing state), or achieving a 10% year-over-year annual growth in Medicare enrollment (including enrollees in Medicare-Medicaid duals programs). However, this metric is further conditioned on achievement of
|
(5)
|
At the time of grant on March 1, 2018, we believed it would be marginally difficult for the Company to achieve the threshold cumulative net income level, which would result in vesting at the 50% level. Further, we believed it would be difficult but achievable to reach the target cumulative net income level, which would result in vesting at the 100% level. Finally, at the time of grant we believed it would be possible but not probable to achieve the maximum cumulative net income level, which would result in vesting at the 200% level, which represents the cap on achievement. The PSUs will be settled by the issuance of shares of common stock of the Company equal to the number of PSUs as described herein, with all amounts interpolated linearly. Because of the Company’s very strong financial performance in 2018, which exceeded our initial expectations at the time the metrics were established, the Company believes that the probability of achievement at the maximum level as of the end of 2020 has been significantly increased.
|
|
Option Awards
|
|
Stock Awards
|
|||||||||||
Name
|
Number of Shares
Acquired
on Exercise
|
|
|
Value Realized on
Exercise
|
|
|
Number of Shares
Acquired on Vesting
|
|
|
Value Realized on
Vesting
|
|
|
||
Jeff D. Barlow
|
—
|
|
|
$
|
—
|
|
|
1,885
|
|
|
$
|
173,100
|
|
(1)
|
|
—
|
|
|
$
|
—
|
|
|
5,043
|
|
|
$
|
362,491
|
|
(2)
|
|
—
|
|
|
$
|
—
|
|
|
7,830
|
|
|
$
|
585,293
|
|
(3)
|
|
—
|
|
|
$
|
—
|
|
|
1,885
|
|
|
$
|
153,024
|
|
(4)
|
Joseph W. White
|
—
|
|
|
$
|
—
|
|
|
2,262
|
|
|
$
|
207,719
|
|
(1)
|
|
—
|
|
|
$
|
—
|
|
|
6,878
|
|
|
$
|
494,391
|
|
(2)
|
|
—
|
|
|
$
|
—
|
|
|
10,794
|
|
|
$
|
806,852
|
|
(3)
|
|
—
|
|
|
$
|
—
|
|
|
2,262
|
|
|
$
|
183,629
|
|
(4)
|
|
—
|
|
|
$
|
—
|
|
|
5,003
|
|
|
$
|
428,457
|
|
(5)
|
(1)
|
On January 19, 2018, due to satisfaction of the underlying performance metric, PSAs vested. The market value of our stock on January 19, 2018 was $91.83 per share.
|
(2)
|
On March 1, 2018, RSAs vested in accordance with the terms of the awards and, due to satisfaction of the underlying performance metric, PSAs vested. The market value of our stock on March 1, 2018 was $71.88.
|
(3)
|
On March 7, 2018, RSAs vested in accordance with the terms of the awards and, due to satisfaction of the underlying performance metric, PSAs vested. The market value of our stock on March 7, 2018 was $74.75.
|
(4)
|
On April 1, 2018, RSAs vested at a closing market price of $81.18.
|
(5)
|
On June 5, 2018, RSAs vested at a closing market price of $85.64
|
Name
|
Executive
Contributions in
the Last FY
($)
|
|
|
Registrant
Contributions in
Last FY
($)
|
|
|
Aggregate
Earnings (Losses)
in Last FY
($)
|
|
|
Aggregate
Withdrawals/
Distributions
(1)
($)
|
|
|
Aggregate
Balance at
Last FYE
($)
|
|
|||||
Joseph M. Zubretsky
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Thomas L. Tran
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Jeff D. Barlow
|
$
|
176,274
|
|
|
$
|
—
|
|
|
$
|
(8,545
|
)
|
|
$
|
—
|
|
|
$
|
167,729
|
|
Pamela S. Sedmak
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Mark L. Keim
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Joseph W. White
|
$
|
15,934
|
|
|
$
|
—
|
|
|
$
|
(729
|
)
|
|
$
|
(15,205
|
)
|
|
$
|
—
|
|
Named Executive Officer
|
Base Salary
|
|
Target Short-Term Bonus
Opportunity
(% of Base Salary)
|
|||
Joseph M. Zubretsky
|
|
|
|
|||
President and Chief Executive Officer
|
$
|
1,300,000
|
|
|
150
|
%
|
Thomas L. Tran
|
|
|
|
|||
Chief Financial Officer
|
$
|
700,000
|
|
|
100
|
%
|
Jeff D. Barlow
|
|
|
|
|||
Chief Legal Officer and Secretary
|
$
|
600,000
|
|
|
100
|
%
|
Pamela S. Sedmak
|
|
|
|
|||
Executive Vice President of Health Plan Operations
|
$
|
750,000
|
|
|
70
|
%
|
Mark L. Keim
|
|
|
|
|||
Executive Vice President of Strategic Planning and Corporate Development
|
$
|
600,000
|
|
|
70
|
%
|
Name & Principal Position
|
Compensation Components
|
Voluntary Termination ($)
|
Retirement
($)
|
Involuntary Not for Cause Termination
($)
|
For Cause Termination
($)
|
Involuntary Not for Cause or for Good Reason Termination (Change-in-Control)
($)
(2)
|
Disability
($)
|
Death
($)
|
||||||||||||||
Joseph M. Zubretsky
|
Cash Severance
(1)
|
$
|
—
|
|
$
|
—
|
|
$
|
4,875,000
|
|
$
|
—
|
|
$
|
6,500,000
|
|
$
|
—
|
|
$
|
—
|
|
President and Chief Executive Officer
|
Stock Awards
|
$
|
—
|
|
$
|
34,502,277
|
|
$
|
24,801,161
|
|
$
|
—
|
|
$
|
34,502,277
|
|
$
|
34,502,277
|
|
$
|
34,502,277
|
|
|
Health Benefits
(3)
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
29,838
|
|
$
|
—
|
|
$
|
—
|
|
|
Disability Income
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
Life Insurance Benefits
(4)
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,968
|
|
$
|
—
|
|
$
|
1,000,000
|
|
|
Total Value
|
$
|
—
|
|
$
|
34,502,277
|
|
$
|
29,676,161
|
|
$
|
—
|
|
$
|
41,034,083
|
|
$
|
34,502,277
|
|
$
|
35,502,277
|
|
Thomas L. Tran
|
Cash Severance
(1)
|
$
|
—
|
|
$
|
—
|
|
$
|
700,000
|
|
$
|
—
|
|
$
|
2,100,000
|
|
$
|
—
|
|
$
|
—
|
|
Chief Financial Officer
|
Stock Awards
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,757,668
|
|
$
|
—
|
|
$
|
—
|
|
|
Health Benefits
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
14,574
|
|
$
|
—
|
|
$
|
—
|
|
|
Disability Income
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
Life Insurance Benefits
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,968
|
|
$
|
—
|
|
$
|
1,000,000
|
|
|
Total Value
|
$
|
—
|
|
$
|
—
|
|
$
|
700,000
|
|
$
|
—
|
|
$
|
4,874,210
|
|
$
|
—
|
|
$
|
1,000,000
|
|
Jeff D. Barlow
|
Cash Severance
(1)(5)
|
$
|
—
|
|
$
|
—
|
|
$
|
1,200,000
|
|
$
|
—
|
|
$
|
1,800,000
|
|
$
|
—
|
|
$
|
—
|
|
Chief Legal Officer and Secretary
|
Stock Awards
|
$
|
—
|
|
$
|
—
|
|
$
|
3,684,872
|
|
$
|
—
|
|
$
|
7,461,674
|
|
$
|
—
|
|
$
|
—
|
|
|
Health Benefits
|
$
|
—
|
|
$
|
—
|
|
$
|
50,000
|
|
$
|
—
|
|
$
|
50,000
|
|
$
|
—
|
|
$
|
—
|
|
|
Disability Income
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
Life Insurance Benefits
(4)
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,968
|
|
$
|
—
|
|
$
|
1,000,000
|
|
|
Total Value
|
$
|
—
|
|
$
|
—
|
|
$
|
4,934,872
|
|
$
|
—
|
|
$
|
9,313,642
|
|
$
|
—
|
|
$
|
1,000,000
|
|
Pamela S. Sedmak
|
Cash Severance
(1)
|
$
|
—
|
|
$
|
—
|
|
$
|
750,000
|
|
$
|
—
|
|
$
|
2,025,000
|
|
$
|
—
|
|
$
|
—
|
|
Executive Vice President of Health Plan Operations
|
Stock Awards
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,212,639
|
|
$
|
—
|
|
$
|
—
|
|
|
Health Benefits
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
Disability Income
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
Life Insurance Benefits
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,968
|
|
$
|
—
|
|
$
|
1,000,000
|
|
|
Total Value
|
$
|
—
|
|
$
|
—
|
|
$
|
750,000
|
|
$
|
—
|
|
$
|
3,239,607
|
|
$
|
—
|
|
$
|
1,000,000
|
|
Mark L. Keim
|
Cash Severance
(1)
|
$
|
—
|
|
$
|
—
|
|
$
|
600,000
|
|
$
|
—
|
|
$
|
1,620,000
|
|
$
|
—
|
|
$
|
—
|
|
Executive Vice President of Strategic Planning and Business Development
|
Stock Awards
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
2,578,921
|
|
$
|
—
|
|
$
|
—
|
|
|
Health Benefits
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
46,638
|
|
$
|
—
|
|
$
|
—
|
|
|
Disability Income
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
Life Insurance Benefits
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,968
|
|
$
|
—
|
|
$
|
1,000,000
|
|
|
Total Value
|
$
|
—
|
|
$
|
—
|
|
$
|
600,000
|
|
$
|
—
|
|
$
|
4,247,527
|
|
$
|
—
|
|
$
|
1,000,000
|
|
(1)
|
The amounts in the table were computed based on the named executive officers’ salaries and target short-term bonus opportunity as of
December 31, 2018
. In January
2019
, the compensation committee determined to leave unchanged the base salaries and the target short-term bonus opportunity for the named executive officers.
|
(3)
|
For Mr. Zubretsky, the amount for health benefits payable upon involuntary, not for cause or good reason termination (change-in-control) represents the amount he would have been entitled to receive for continued health care and dental benefits under the Company’s applicable benefits programs for 24 months following the date of termination, pursuant to the Company’s change in control severance plan.
|
•
|
the median of the total direct compensation of all employees of our Company (other than Mr. Zubretsky, our chief executive officer), was $65,652; and
|
•
|
the total direct compensation of Mr. Zubretsky, our chief executive officer, was $15,219,770.
|
•
|
Salary received in fiscal year 2018;
|
•
|
Short term incentives (cash bonus);
|
•
|
Long term incentives (equity-based awards);
|
•
|
Company-paid 401(K) plan match (4%) made in fiscal year 2018; and
|
•
|
All other compensation (stipends, sign-on bonus, one-time bonus, etc.).
|
•
|
Joseph M. Zubretsky, president and chief executive officer;
|
•
|
Thomas L. Tran, chief financial officer;
|
•
|
Jeff D. Barlow, chief legal officer and secretary;
|
•
|
Pamela S. Sedmak, executive vice president of health plan operations; and
|
•
|
Mark L. Keim, executive vice president of strategic planning and corporate development.
|
1. Acadia Healthcare Company, Inc.
|
8. Humana Inc.
|
2. Aetna, Inc.
|
9. Magellan Health, Inc.
|
3. Anthem, Inc.
|
10. Tenet Healthcare Corporation
|
4. Centene Corporation
|
11. Triple-S Management Corporation
|
5. Cigna Corporation
|
12. Universal Health Services, Inc.
|
6. Community Health Systems, Inc.
|
13. WellCare Health Plans, Inc.
|
7. DaVita Inc.
|
|
|
Base Salary
|
||||||||||
Named Executive Officer
|
2019
|
2018
|
Change ($)
|
Change (%)
|
|||||||
Joseph M. Zubretsky, President and Chief Executive Officer
|
$
|
1,300,000
|
|
$
|
1,300,000
|
|
$
|
—
|
|
—
|
|
Thomas L. Tran, Chief Executive Officer
|
$
|
700,000
|
|
$
|
700,000
|
|
$
|
—
|
|
—
|
|
Jeff D. Barlow, Chief Legal Officer and Secretary
|
$
|
600,000
|
|
$
|
600,000
|
|
$
|
—
|
|
—
|
|
Pamela S. Sedmak, Executive Vice President of Health Plan Operations
(1)
|
$
|
750,000
|
|
$
|
750,000
|
|
$
|
—
|
|
—
|
|
Mark L. Keim, Executive Vice President of Strategic Planning and Corporate Development
(2)
|
$
|
600,000
|
|
$
|
600,000
|
|
$
|
—
|
|
—
|
|
•
|
70% of the bonus opportunity shall be based on the Company’s pre-tax income achievement in 2019. The target bonus level shall be based on the achievement of pre-tax income in 2019 that corresponds with the high end of the range of the Company’s 2019 preliminary guidance. Achievement at the target pre-tax income level shall trigger payout in cash of this bonus element at 100%. Achievement at a substantial fraction of the target level shall constitute the threshold level of achievement, triggering payout of this bonus element at 50%. Achievement substantially in excess of the target level shall trigger payout of this bonus element at the maximum amount of 200%. Under all circumstances payout shall be capped at the 200% level. All pre-tax income amounts shall be calculated net of the short-term cash bonus payouts. The actual
|
•
|
30% of the bonus opportunity shall be subject to the compensation committee’s evaluation of each executive officer’s individual performance, and shall be based upon consideration by the committee of a wide variety of factors closely aligned with the chief executive officer’s goals and objectives, including for purposes of illustration (but not limited to), such factors as: (1) performance and operational improvements; (2) talent identification and succession planning; (3) financial planning and capital management; (4) development of a long term strategic plan; and (5) miscellaneous other factors as may be identified by the compensation committee in the exercise of its discretion. As with the pre-tax income metric, payment of the discretionary bonus shall be capped at the 200% level.
|
•
|
The 70% pre-tax income bonus metric and the 30% individual performance bonus shall be determined and paid independently. Entry level achievement of the pre-tax income metric shall not serve as a condition for any partial or full payment of the individual performance bonus.
|
Named Executive Officer
|
Base Salary
|
|
Target Bonus
Opportunity
(% of Base Salary)
|
|
Target
Net Income Bonus Opportunity
(70% of Target Bonus Opportunity)
|
|
Individual Performance Bonus Opportunity
(30% of Target Bonus Opportunity)
|
|||||||
Joseph M. Zubretsky
|
|
|
|
|
|
|
|
|||||||
President and Chief Executive Officer
|
$
|
1,300,000
|
|
|
150
|
%
|
|
$
|
1,365,000
|
|
|
$
|
585,000
|
|
Thomas L. Tran
|
|
|
|
|
|
|
|
|||||||
Chief Financial Officer
|
$
|
700,000
|
|
|
100
|
%
|
|
$
|
490,000
|
|
|
$
|
210,000
|
|
Jeff D. Barlow
|
|
|
|
|
|
|
|
|||||||
Chief Legal Officer and Secretary
|
$
|
600,000
|
|
|
100
|
%
|
|
$
|
420,000
|
|
|
$
|
180,000
|
|
Pamela S. Sedmak
|
|
|
|
|
|
|
|
|||||||
Executive Vice President of Health Plan Operations
|
$
|
750,000
|
|
|
70
|
%
|
|
$
|
367,500
|
|
|
$
|
157,500
|
|
Mark L. Keim
|
|
|
|
|
|
|
|
|||||||
Executive Vice President of Strategic Planning and Corporate Development
|
$
|
600,000
|
|
|
70
|
%
|
|
$
|
294,000
|
|
|
$
|
126,000
|
|
|
Performance Stock Units
|
Restricted Stock Awards
|
|
|
||||||||||
Named Executive Officer
|
PSUs (#)
|
PSUs ($)
|
RSAs Total (#)
|
RSAs Total ($)
|
Total (#)
|
Total ($)
|
||||||||
Joseph M. Zubretsky
|
56,359
|
|
$
|
7,800,085
|
|
37,572
|
|
$
|
5,199,965
|
|
93,931
|
|
13,000,050
|
|
Thomas L. Tran
|
8,671
|
|
$
|
1,200,066
|
|
5,780
|
|
$
|
799,952
|
|
14,451
|
|
2,000,018
|
|
Jeff D. Barlow
|
8,671
|
|
$
|
1,200,066
|
|
5,780
|
|
$
|
799,952
|
|
14,451
|
|
2,000,018
|
|
Pamela S. Sedmak
|
8,671
|
|
$
|
1,200,066
|
|
5,780
|
|
$
|
799,952
|
|
14,451
|
|
2,000,018
|
|
Mark L. Keim
|
8,671
|
|
$
|
1,200,066
|
|
5,780
|
|
$
|
799,952
|
|
14,451
|
|
2,000,018
|
|
•
|
Until the election of directors at the 2022 annual meeting of stockholders, the Board shall be divided into three classes of directors, Class I, Class II, and Class III (each class as nearly equal in number as possible). Each director elected at or prior to the Company’s 2019 annual meeting of stockholders shall be elected for a term expiring on the date of the third annual meeting of stockholders following the annual meeting at which the director was elected.
|
•
|
Each Class III director elected at the Company’s 2020 annual meeting of stockholders shall be elected to a one-year term expiring at the Company’s 2021 annual meeting of stockholders.
|
•
|
Each Class III and Class I director elected at the Company’s 2021 annual meeting of stockholders shall be elected to a one-year term expiring at the Company’s 2022 annual meeting of stockholders.
|
•
|
From and after the Company’s 2022 annual meeting of stockholders, the Board shall no longer be divided into classes, and all directors shall be elected for a one-year term expiring at the next annual meeting of stockholders.
|
•
|
until the Board ceases to be classified at the 2022 annual meeting of stockholders, removal may only be for cause; and
|
•
|
from and after the 2022 annual meeting of stockholders, removal may be with or without cause.
|
ü
|
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE
FOR
THE ADOPTION OF THE AMENDMENTS TO THE COMPANY’S CERTIFICATE OF INCORPORATION, AS AMENDED, TO PROVIDE FOR ANNUAL ELECTION OF ALL DIRECTORS.
|
|
RSAs
|
PSUs
|
||
Outstanding at March 11, 2019
|
483,415
|
|
325,709
|
|
|
Shares
|
Weighted Average Exercise Price ($)
|
Weighted Average Remaining Term (Years)
|
|||
Stock Options Outstanding at March 11, 2019
|
405,000
|
|
$
|
64.79
|
|
8.2
|
ü
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
THE PROPOSAL TO APPROVE THE 2019 PLAN.
|
ü
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSAL NO. 4 TO APPROVE THE 2019 PLAN.
|
ü
|
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
FOR
PROPOSAL NO. 5 TO APPROVE THE 2019 ESPP.
|
ü
|
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
FOR
THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP.
|
•
|
EY’s national capabilities;
|
•
|
EY’s technical expertise and knowledge of the Company’s operations and industry;
|
•
|
the quality and candor of EY’s communications with the audit committee and management;
|
•
|
EY’s independence;
|
•
|
the quality and efficiency of the services provided by EY, including input from management on EY’s performance and how effectively EY demonstrated its independent judgment, objectivity and professional skepticism;
|
•
|
external data on audit quality and performance, including recent PCAOB reports on EY and its peer firms; and
|
•
|
the appropriateness of EY’s fees, EY’s tenure as independent auditors, including the benefits of a longer tenure, and the controls and processes in place that help ensure EY’s continued independence.
|
•
|
Enhanced audit quality
- EY’s significant institutional knowledge and deep expertise of the Company’s business, accounting policies and practices and internal control over financial reporting enhance audit quality.
|
•
|
Competitive fees
- because of EY’s familiarity with the Company, audit and other fees are competitive compared to EY’s peer companies.
|
•
|
Avoidance of costs associated with new auditor
- engaging new independent auditors would be costly and require a significant time commitment which could lead to management distractions.
|
•
|
Audit Committee oversight
- oversight includes regular private sessions with EY, discussion with EY about the scope of audit and business imperatives, a comprehensive annual evaluation when determining whether to reengage EY, and direct involvement by the audit committee and its chair in the selection of the lead assurance engagement partner and coordinating partner in connection with the mandated rotation of these positions.
|
•
|
Limits on non-audit services
- the audit committee pre-approves audit and permissible non-audit services provided by EY in accordance with its pre-approval policy.
|
•
|
EY’s internal independence process
- EY conducts periodic internal reviews of its audit and other work, assesses the adequacy of partners and other personnel working on the Company’s account and rotates the lead assurance engagement partner and other partners on the engagement consistent with independence requirements. A new lead engagement partner was designated starting with the 2014 audit.
|
•
|
Strong regulatory framework
- EY, as an independent registered public accounting firm, is subject to PCAOB inspections, “Big 4” peer reviews, and PCAOB and SEC oversight.
|
•
|
Are there any significant accounting judgments or estimates made by management in preparing the financial statements that would have been made differently had the independent auditors prepared and been responsible for the financial statements?
|
•
|
Based on the independent auditors’ experience, and their knowledge of the Company, do the Company’s financial statements fairly present to investors, with clarity and completeness, the Company’s financial position and performance for the reporting period in accordance with generally accepted accounting principles and SEC disclosure requirements?
|
•
|
Based on the independent auditors’ experience, and their knowledge of the Company, has the Company implemented internal controls and internal audit procedures that are appropriate for the Company?
|
|
Year Ended December 31,
|
||||||
|
2018
|
|
2017
|
||||
|
(In thousands)
|
||||||
Audit Fees
(1)
|
|
|
|
||||
Integrated audit of the financial statements and internal control over financial reporting (including audits of subsidiaries)
|
$
|
4,112
|
|
|
$
|
4,539
|
|
Quarterly reviews
|
251
|
|
|
247
|
|
||
Audit work relating to debt and equity offerings, including registration statements
|
—
|
|
|
92
|
|
||
Total audit fees
|
4,363
|
|
|
4,878
|
|
||
Audit-Related Fees(2)
|
|
|
|
||||
State agreed-upon procedures report and audit work paper review
|
10
|
|
|
81
|
|
||
Service Organization Control 1 audits
|
866
|
|
|
804
|
|
||
Total audit-related fees
|
876
|
|
|
885
|
|
||
Tax Fees(2)
|
|
|
|
||||
Federal and state hiring incentives
|
50
|
|
|
67
|
|
||
Routine on-call advisory services
|
20
|
|
|
56
|
|
||
Tax advisory services
|
37
|
|
|
—
|
|
||
Total tax fees
|
107
|
|
|
123
|
|
||
Total Fees
|
$
|
5,346
|
|
|
$
|
5,886
|
|
(1)
|
Includes fees related to the fiscal year audit and interim reviews, notwithstanding when the fees were billed or when the services were rendered.
|
(2)
|
Includes fees for services rendered from January through December of the fiscal year, notwithstanding when the fees were billed.
|
Name
|
Number of Shares
Beneficially Owned
(1)
|
Percentage of
Outstanding Shares
|
|
Directors, Nominees for Directors, and Executive Officers:
|
|
|
|
Joseph M. Zubretsky
(2)
|
209,382
|
|
*
|
Thomas L. Tran
|
15,526
|
|
*
|
Jeff D. Barlow
|
56,212
|
|
*
|
Pamela S. Sedmak
|
9,535
|
|
*
|
Mark L. Keim
|
20,249
|
|
*
|
Garrey E. Carruthers
(3)
|
6,967
|
|
*
|
Daniel Cooperman
(4)
|
22,720
|
|
*
|
Chuck Z. Fedak
|
18,937
|
|
|
Steven J. Orlando
(5)
|
24,937
|
|
*
|
Ronna E. Romney
(6)
|
22,207
|
|
*
|
Richard M. Schapiro
|
12,788
|
|
*
|
Dale B. Wolf
(7)
|
25,687
|
|
*
|
Richard C. Zoretic
|
1,143
|
|
*
|
Barbara L. Brasier
|
0
|
|
*
|
All executive officers, directors, and nominees for directors as a group (16 persons)**
|
483,870
|
|
*
|
*
|
Denotes less than 1%.
|
**
|
Includes all Section 16 reporting persons.
|
(1)
|
As required by SEC regulation, the number of shares shown as beneficially owned includes shares which could be purchased within 60 days of
March 11, 2019
. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws, and the address of each of the named stockholders is c/o Molina Healthcare, Inc., 200 Oceangate, Suite 100, Long Beach, California 90802.
|
(2)
|
Mr. Zubretsky holds 375,000 options, with 125,000 options to purchase exercisable within 60 days of March 11, 2019.
|
(3)
|
All shares held by Carruthers Family Revocable Trust.
|
(4)
|
Consists of: 7,720 shares and 15,000 options.
|
(5)
|
Consists of: 23,437 shares held by Orlando Family Trust and 1,500 shares held by Mr. Orlando’s 401(k) plan.
|
(6)
|
All shares held by Ronna Romney Revocable Trust.
|
(7)
|
Consists of: 10,687 shares and 15,000 options.
|
Name
|
Number of Shares
Beneficially Owned
|
Percentage of
Outstanding Shares
|
||
Other Principal Stockholders:
|
|
|
|
|
T. Rowe Price Associates, Inc.
(1)
|
6,525,221
|
|
10.40
|
%
|
The Vanguard Group
(2)
|
5,940,241
|
|
9.52
|
%
|
BlackRock, Inc.
(3)
|
5,743,870
|
|
9.20
|
%
|
FMR, LLC
(4)
|
4,913,101
|
|
7.87
|
%
|
Renaissance Technologies LLC/Renaissance Technologies Holding Corporation
(5)
|
3,989,555
|
|
6.39
|
%
|
SMALLCAP World Fund, Inc.
(6)
|
3,905,187
|
|
6.20
|
%
|
Capital World Investors
(7)
|
3,655,314
|
|
5.80
|
%
|
Capital Research Global Investors
(8)
|
3,136,620
|
5.00
|
%
|
(1)
|
Based on the Schedule 13G/A filed by such stockholder on February 14, 2019. Such stockholder’s address is 100 East Pratt Street, Baltimore, Maryland 21202.
|
(2)
|
Based on the Schedule 13G/A filed by such stockholder on February 11, 2019. Such stockholder’s address is 100 Vanguard Boulevard, Malvern, PA 19355.
|
(3)
|
Based on the Schedule 13G/A filed by such stockholder on February 6, 2019. Such stockholder’s address is 55 East 52nd Street, New York, NY 10055.
|
(4)
|
Based on the Schedule 13G filed by such stockholder on February 13, 2019. Such stockholder’s address is 245 Summer Street, Boston, MA 02210.
|
(5)
|
Based on the Schedule 13G filed by such stockholder on February 12, 2019. Such stockholder’s address is 800 Third Avenue, New York, NY 10022.
|
(6)
|
Based on the Schedule 13G filed by such stockholder on February 14, 2019. Such stockholder’s address is 6455 Irvine Center Drive, Irvine, CA 92618.
|
(7)
|
Based on the Schedule 13G/A filed by such stockholder on February 14, 2019. Such stockholder’s address is 333 South Hope Street, 55th Floor, Los Angeles, CA 90071.
|
(8)
|
Based on the Schedule 13G filed by such stockholder on February 14, 2019. Such stockholder’s address is 333 South Hope Street, 55th Floor, Los Angeles, CA 90071.
|
|
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a)
|
Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (b)
|
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (c)
|
Plan Category
|
|
|
|
Equity compensation plans approved by security holders
|
405,000
(1)
|
$64.79
|
2,041,230
(2)
|
(1)
|
Options to purchase shares of our common stock issued under the 2011 Equity Incentive Plan.
|
(2)
|
Includes shares remaining available to issue under the 2011 Equity Incentive Plan, and the 2011 Employee Stock Purchase Plan.
|
By Order of the Board of Directors
|
|
Dale B. Wolf
|
Chairman of the Board
|
Proposal
|
Votes Required for Approval
|
Effect of Abstention
|
Broker Non-Votes
|
Unmarked/Signed Proxy Cards
|
To elect three Class II directors to hold office until the 2022 annual meeting.
(1)
(Proposal 1 on the proxy card)
|
The number of votes cast “For” a nominee exceed the number of votes cast “Against” that nominee
(2)
|
No effect
|
Not voted, No effect
(3)
|
Counted as “For”
|
To consider and approve, on a non-binding, advisory basis, the compensation of our named executive officers.
(Proposal 2 on the proxy card)
|
Majority of shares present in person or by proxy and entitled to vote
|
Counted as “Against”
|
Not voted, No effect
(3)
|
Counted as “For”
|
To adopt amendments to the Company’s Certificate of Incorporation, as amended, to phase out and eliminate the classified Board of Directors to provide for the annual election of all directors.
(Proposal 3 on the proxy card)
|
Majority of shares outstanding and entitled to vote
|
Counted as “Against”
|
Counted as “Against”
(3)
|
Counted as “For”
|
To approve the Molina Healthcare, Inc. 2019 Equity Incentive Plan
(Proposal 4 on the proxy card)
|
Majority of shares present in person or by proxy and entitled to vote
|
Counted as “Against”
|
Not voted, No effect
(3)
|
Counted as “For”
|
To approve the Molina Healthcare, Inc. 2019 Employee Stock Purchase Plan
(Proposal 5 on the proxy card)
|
Majority of shares present in person or by proxy and entitled to vote
|
Counted as “Against”
|
Not voted, No effect
(3)
|
Counted as “For”
|
To ratify the appointment of Ernst & Young LLP
(Proposal 6 on the proxy card)
|
Majority of shares present in person or by proxy and entitled to vote
|
Counted as “Against”
|
Counted as “Against”
(4)
|
Counted as “For”
|
1.
|
The election of three Class II directors to hold office until the 2022 annual meeting;
|
2.
|
The compensation of our named executive officers (as an advisory vote);
|
3.
|
The amendment of our Certificate of Incorporation and the amendment and restatement of our bylaws to declassify the Board;
|
4.
|
The approval of the Molina Healthcare, Inc. 2019 Equity Incentive Plan;
|
5.
|
The approval of the Molina Healthcare, Inc. 2019 Employee Stock Purchase Plan; and
|
6.
|
The ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for
2019
; and
|
7.
|
Any other matters properly brought before the meeting or any adjournment or postponement thereof.
|
•
|
fill out the enclosed
proxy card
, date and sign it, and return it in the enclosed postage-paid envelope;
|
•
|
vote by
telephone
(instructions are on the proxy card); or
|
•
|
vote by
Internet
(instructions are on the proxy card).
|
1.
|
For
the three director nominees listed on the card;
|
2.
|
For
the approval, on a non-binding, advisory basis, the compensation of our named executive officers;
|
3.
|
For
the approval, to amend our Certificate of Incorporation and amend and restate our bylaws to declassify the Board;
|
4.
|
For
the approval of the Molina Healthcare, Inc. 2019 Equity Incentive Plan;
|
5.
|
For
the approval of the Molina Healthcare, Inc. 2019 Employee Stock Purchase Plan; and
|
6.
|
For
the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for
2019
.
|
1.
|
ESTABLISHMENT, PURPOSE AND TERM OF PLAN
.
|
2.
|
DEFINITIONS AND CONSTRUCTION
.
|
3.
|
ADMINISTRATION
.
|